Households braced for budget cuts

More than half of consumers expect their household budget to be tighter this
year.

Consumers are caught in a "long squeeze" that has many unable to save, too worried to spend and unlikely to cope with financial shocks, according to a report.

More than half of consumers expect their household budget to be tighter this year and 42pc expect the economy to get worse in the next 12 months, the latest Which? Quarterly Consumer Report found.

Financial resilience has also taken a hit, with 41pc already finding it tough to cope with an unexpected expense.

The Populus poll of 2,060 UK adults in early January found 50pc of people who have yet to retire are not paying into a pension and more than a third said they have no intention of doing so in the near future.

Of these, 41pc said they could not afford a pension, while 58pc of those who are still working do not feel confident that they will be able to live comfortably in retirement.

The survey also found that more than a third have increased their total level of debt in the past month, while the figures suggested that almost six million households dipped into their savings to cover monthly household spending on items like food and utility bills, seven million cut spending on everyday essentials and four million used credit to pay for food.

Which? executive director Richard Lloyd said: "Our research paints a gloomy picture of worried and pessimistic consumers, with a majority expecting their household budget to get even tighter than last year.

"People have as little money to spend now as they had at the start of the recession four years ago, with many simply unable to prepare for unexpected costs or for their retirement.

"There's no doubt that the big squeeze has turned into a long squeeze. The assault on real incomes is unlikely to change for the better soon, with consequences not only for individual consumers but also for economic recovery."